Both Amy and Tom Are Trained as Nurses

question 117

Multiple Choice

Both Amy and Tom are trained as nurses. Amy makes $35,000 a year working as a nurse in an emergency room in a New York City hospital. Tom makes $20,000 working as a community health nurse in New York City. Which of the following is true?

• A) Tom is clearly worse off than Amy, because he earns $15,000 a year less.
• B) Tom must be better off than Amy if he is willing to take a job at $15,000 a year less than Amy.
• C) From this information it cannot be determined who is better off because income is an imperfect measure of well-being.
• D) Even though income is an imperfect measure of well-being, Amy and Tom must be equally well off because either is free to switch jobs.

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Definitions:

Book Value

The asset's recorded value on the balance sheet, determined by subtracting any depreciation or amortization from the asset's cost.

No-Par

Refers to stocks issued without a par value, meaning the stock's value is not set and can be determined by the company's board of directors.

Stated Value

A specified value assigned to no-par-value stock by the company's board of directors.

General Journal

A comprehensive accounting record where all financial transactions are initially recorded, using a double-entry accounting system.